Fort Kobbe Vaults Newsletter - Gold and Silver Charts

A look at Gold and Silver Charts (2022-12-01)

I think we have lost sight of the real powers of congress. Ronald Reagan however seems to have had them well understood and watching what he had to say is definitely worth five minutes of your time.

Ronald Reagan Warned Us About Inflation

SILVER

Silver demand looks like it will hit record levels by the end of  2022, according to the Silver Institute Review. Physical investment, industrial demand, jewelry, and silverware production are up.

Global silver demand is projected to reach a new high of 1.21 billion ounces in 2022, a 16% increase from 2021. Silver ETF holdings have decreased, while physical demand has increased.

Physical investment demand is expected to increase by 18% to 329 million ounces this year according to the Silver Institute. Indian demand has almost doubled. COMEX stock levels have been falling rapidly.

More than 60% of silver usage each year is industrial and is on track to set a new record of 539 million ounces in 2022. Green energy has helped drive industrial demand higher with it being used in solar panels, photovoltaic cells and electric vehicles. 

Demand for silver jewelry and silverware is projected to surge by 29% and 72% respectively. Jewelry production is about 235 million ounces and silverware fabrication another 73 million ounces this year. 

Global production from silver mines output is only expected to increase only by 1% in 2022 resulting in another deficit this year. The 194 million ounce shortfall will represent a multi-decade high.

Silver is significantly undervalued. The silver to gold ratio is currently about 83:1. It takes over 83 ounces of silver to buy an ounce of gold. The miners are saying that silver is currently being extracted from the ground at about eight ounces of silver to one ounce of gold. If the ratio would return to reality it would imply a price for silver almost ten times its current price.

Read more about the Silver Demand by clicking here

GOLD

The World Gold Council said that it could not identify the source for 300 tonnes (US$ 15,325,887,500.00) in official sector gold demand in early November, (this is a huge amount of gold to be unidentified), speculation is that the whale might be China.

According to a recent Nikkei Asia Report (Read the entire report here). “China likely bought a substantial amount of gold from Russia,” analyst Itsuo Toshima said Central banks bought a net 399.3 tonnes between July and September 2022, Turkey 31.2 tonnes, Uzbekistan 26.1 tonnes and India 17.5 tonnes.

Chinese customs authorities, according to the same report, announced an “eightfold” surge in gold purchased from Russia in July. In addition, the report cites China selling $121.2 billion in U.S. Treasuries this year, “the equivalent of roughly 2200 tonnes of gold.” (Watch the dollar as countries, scared of depreciation of the dollar, sell their treasuries and invest the proceeds in hard assets).

The freezing of assets and restriction of access to their funds as well as use of the SWIFT transfer system as a political weapon is backfiring on the US and encouraging countries to purchase gold, bring their holdings on shore, reduce their dollar holdings and be much more circumspect in their dealings with the US.

Lombardi Letter’s Moe Zulfiqar says he “can’t help but be bullish on gold’s future prospects based on the enduring presence of central bank demand. This could be a catalyst that sends gold prices toward $3,000 per ounce much sooner than previously expected.…”

As confidence in the dollar fades, it makes sense that assets priced in dollars would increase in price. The prolific spending and printing of dollars is doing nothing to preserve its value either. The complete dependence of other worldwide currencies on trade with the US ensures to a large extent that the devaluation of the dollar goes largely unnoticed as those countries devalue to remain competitive. 

This cannot end well. Both gold and silver are vastly undervalued and deliberately so. In my opinion, silver is much more undervalued than gold. I view this as a gift.

Central Bank Gold Sales and Purchases

2002-2022 (Q3) (net: metric tonnes)

Chart by USAGOLD [All rights reserved] • • • Data Source: World Gold Council

Some further reading: Central Banks Load Up on Gold Again: Gold Prices Could Skyrocket

TodayLast Week
Gold Price$1,784.00$1,756.00
Silver Price$22.20$21.54
Gold:Silver Ratio80.27:181.50:1
Gold Miners Bullish Percent Index51.7244.83
Dollar Index105.47105.87
Dow:Gold Ratio
(BahaUS30 34550.00/Gold price ,1784.00)
19.3619.53
Current USA Inflation Rate (Dept. of Statistics)7.7%8.2%

Gold’s low of the week was $1,738.00 and the high was $1,786.00, now trading at around $1,786.00. 

The monthly chart for Gold has a few buy indications, and looks more positive by the day. The possibility of $1,561.00 seems less likely. The weekly chart triggered a buy two weeks ago. The daily chart is a buy.

$GOLD Gold - Continuous Contract (EOD) CME

The low for Silver this week was $21.00 and the high $22.40, trading around $22.16 at present.

Silver on the monthly chart is a buy. On the weekly chart we have a buy which is holding and is slightly overbought. On the daily chart, we have a buy signal.

$SILVER Silver - Continuous Contract (EOD) CME

On the Stockcharts.com charts, the blue vertical lines are our proprietary system buy signals and the red vertical lines are system sell signals – for information purposes only

Please contact us to arrange the purchase and storage of your gold and silver requirements in a safe, insured, location outside of your jurisdiction.

This is my interpretation of the market and is not to be taken as financial advice. Before making any buy or sell decisions I recommend that you consult with your professional financial advisor.

Larry Simon

Larry Simon was educated at the University of Witwatersrand, Johannesburg, South Africa and is an experienced businessman specialised in management, investment and finance.

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